National Instrument 24-101-Institutional Trade Matching and

Settlement

Randee Pavalow

March 7, 20072

History of rule

CSA publication for comment on April 16, 2004– Discussion Paper 24-401 on STP– Proposed NI 24-101 and related

Companion Policy (CP) Republication of NI 24-101 and CP for

comment on March 3, 2006 Publication of final NI 24-101 and CP on

January 12, 2007

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Main purpose of NI 24-101

Central element of Instrument is to ensure that market participants establish, maintain and enforce policies and procedures designed to achieve matching of institutional trades by no later than the end of the day on which the trade was executed or “T” (same-day matching).

March 7, 20074

Important features of NI 24-101

Rule requires dealers and advisers to have policies and procedures designed to achieve same-day matching

Rule also requires “trade-matching parties” to either enter into written agreement or provide to each other written statement confirming that each has established policies and procedures designed to achieve timely matching

“Trade-matching party” includes dealers, advisers, institutional investors and custodians

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Important features of NI 24-101

Compliance monitored through exception reporting of dealers and advisers and quarterly reporting of recognized clearing agencies and MSUs

Registrants will be required to report root causes of failure to match on time and actions taken to correct problems. Root cause can be fault of other trade-matching party

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Important dates

April 1, 2007 – Effective date of 24-101 October 1,2007

- Written agreements or statements in place by October 1, 2007

- Start of first quarter monitoring for reporting purposes

February 14, 2008 – first exception report due

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Gradual transition to matching on T

Noon on T+1 - April 1, 2007 to June 30, 2008

11:59 p.m. on T – Starting July 1, 2008

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Gradual transition for exception reporting

Exception reporting if fail to match within timeline in any calendar quarter at least:– Q4, 2007 - 80% of institutional trades on T+ 1– Q1 & Q2, 2008 - 90 % of institutional trades on T +

1– Q3 & Q4, 2008 - 70 % of institutional trades on T– Q1 & Q2, 2009 - 80 % of institutional trades on T– Q3 & Q4, 2009 - 90 % of institutional trades on T– Q1, 2010 - 95 % of institutional trades on T

March 7, 20079

Check list on how to get ready

Review current systems capabilities and procedures to identify what may prevent your firm from achieving rule requirements

Develop policies and procedures to achieve targets Identify what changes need to be made to services

provided by third parties or whether third party services could assist

Develop trade matching statement or agreement

March 7, 200710

Check list

Put in place monitoring processes to assess own and other trade matching partners’ adherence to best practices and timelines

Plan for no exception reporting Make and test any systems and procedural

changes needed Negotiate and/or receive any agreements

and statements from trade matching partners

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Questions being discussed

Documentation Source of information for exception reporting Monitoring trade matching partners’

compliance

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Process for identifying and resolving issues

Industry discussions Discussions with regulators Report to industry